Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on Bermuda-based insurer International General Insurance Co. Ltd. (IGI) to ‘BBB+’ from ‘BBB’ and assigned them a stable outlook.
S&P said the upgrade reflects its opinion that “the company’s continued expansion has improved the competitive position, although it remains a limiting factor for the rating. We believe that IGI has a lower risk appetite than most peers, which is supplemented by improved risk management. The ratings also benefit from the company’s very strong capitalization and good operating performance.”
Credit analyst Matt Day added: “IGI has very strong capitalization, supported by excellent capital adequacy. We consider it well positioned to support its expansion plans through to 2011. Reserving levels are considered good and the reinsurance program is extensive, with a diverse panel and strongly rated participants. The company continues to reduce its relatively high exposure to Jordan-domiciled assets.”
S&P cited IGI’s “good earnings track record, despite the energy-related underwriting losses in 2005/2006 that arose from the U.S. hurricane season. This is demonstrated by a five-year average net combined ratio of 89 percent, albeit with a favorable cyclical backdrop.
“We expect that IGI will maintain its good operating performance while growing its competitive position following its restructuring and the opening of new regional offices in Dublin, Kuala Lumpur, and Dubai.
“The company is expected to maintain a focus on providing cover for facultative risks across markets in the Middle East, Asia, and Africa, with a material amount of premium from the more developed global markets.”
The report also noted that S&P expects IGI’s “net combined ratios to be better than 90 percent, with a tolerance of up to 110 percent in peak loss years. Capital adequacy is expected to be maintained at the extremely strong level in the medium term.”
However, the rating agency indicated that “positive rating action is constrained by its current competitive position. Negative rating action could be driven by deterioration in client acceptability, an erosion of operating performance over time, or a peak loss exceeding expectations.”
Source: Standard & Poor’s – www.standardandpoors.com
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